Tory rethink on free Bank of England

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The Independent Online
WILLIAM HAGUE may end the Tories' hostility to an independent Bank of England in an important policy U-turn.

The Tories criticised Gordon Brown, the Chancellor, for transferring decisions on interest rates to the Bank just three days after Labour won power in 1997. But Francis Maude, the shadow Chancellor, will announce a review of Conservative policy on the Bank in a speech later this month.

Mr Maude is considering a plan to outflank Labour by proposing to give the Bank greater independence. He wants the six outside experts on the Bank's Monetary Policy Committee, who are currently appointed for three years, to serve much longer periods.

Mr Maude will point out that members of the German Bundesbank serve for 14 years and the US Federal Reserve for 10 years, as a safeguard against political interference.

Tory officials said last night, however, that no decisions had been taken and that Mr Maude's speech would leave open the option of handing back control of interest rates to the Treasury.

Kenneth Clarke, the former chancellor, and Michael Portillo, the former Treasury chief secretary, have both come out in favour of independence. But such a policy could be opposed by many Conservative MPs.

One Tory source said yesterday that he believed a majority of Tory back- benchers would support restoring control of interest rates to the Treasury. "Maude is moving in the opposite direction, towards more independence," he said.

The review is part of an attempt to "clear the decks" before Mr Hague starts to unveil new Tory policies at the party conference in October.

In a similar move, the Opposition is likely to announce that it will not abolish the national minimum wage if it wins the next election.

The Tories have railed against the move but admit privately it would be "politically disastrous" to fight the next election on a pledge to scrap a measure that has helped two million low-paid workers.